Tesla to Shutter Stores In Favor of Online Sales

Tucked into the exciting announcement about the availability of Tesla’s $35,000 Model 3 was a significant change to the company’s operations. Tesla surprised watchers with news that it plans to close many of its 378 retail stores worldwide.

It’s not immediately clear how many stores or employees will be effected by the change. Tesla said it plans to operate an online-only sales model.

“Shifting all sales online, combined with other ongoing cost efficiencies, will enable us to lower all vehicle prices by about 6% on average, allowing us to achieve the $35,000 Model 3 price point earlier than we expected,” the company said.

“Over the next few months, we will be winding down many of our stores, with a small number of stores in high-traffic locations remaining as galleries, showcases and Tesla information centers.”

Stores have been a pain for Tesla. Some states’ dealership laws have kept them from opening stores, while others allowed them to showcase the vehicles without taking orders. It seems the company would be glad to be rid of the legal wrangling necessary to open stores.

“The important thing for customers in the United States to understand is that, with online sales, anyone in any state can quickly and easily buy a Tesla,” the company said in a blog post.

Tesla also said it wants to make it easier to try out and return a car. Consumers can now return a car within seven days or 1,000 miles for a full refund.

“Quite literally, you could buy a Tesla, drive several hundred miles for a weekend road trip with friends and then return it for free,” the post said.

 

[gnuarm]

The inventory and used car sales is what I am most confused about. Buying used from Tesla isn't really too great as of now, but with fewer sales people and stores, this could easily become even more frustrating. Same goes for cars that are new, but already built.

The order process on the internet is easy enough, but I wouldn't buy a used car w/o having a look at it first.

Lol, did you see the videos on this by Rich Rebuilds? I think that is his YouTube name. He wasted a couple of months and lots of leg work trying to buy a used Tesla without ever driving it and in the process found that they are just selling "used" Teslas and not a... well, I don't recall the term for extensive inspection and providing a new warranty like the luxury car makers do, but Tesla doesn't do that anymore.

 

[Tam]

...the term...

CPO: Certified Pre-Owned.

 

[TheGrimSweeper]

Way too much doom and gloom here without people really knowing anything.

They will be fine. No other car company has "stores".
It's always a combo of service center + dealership.

I'm pretty sure Tesla will now only just have that,instead of store retail locations in high end malls and stuff that cant service cars.

Really I think this is a positive.

Shut down retail only locations. Put that money into new Service Center + Store locations. That way you dont have retail people just hanging around the store if nobody is in it. They could be servicing cars as well.

 

[tmxninja]

I really like the showroom test drives, but it was a pain to get a test drive. The sales person at the showroom tells me I need to sign up online. When I wanted to look at pricing of options after the test drive, again, I was told to look online.

While they provided great info on features during the test drive. they took down my email but did not followup on questions they could not readily answer. This happened several times at multiple showrooms. I feel that the sales team at showrooms do not have any incentive to contact customers. Their attitude almost convinced me not to buy a Tesla. In comparison, attitude was much better at BMW and Infiniti for similarly priced vehicles.

Perhaps it's an employee training issue. Perhaps it's a lack of store strategy/vision to get from test drive to finalizing the sale. Closing showrooms would reduce cost but would reduce exposure as well. So much restructuring and changes certainly make people nervous. While I have not experienced the service center yet, I hope they get to a point of doing repairs instead of just swapping out parts like many owners have discussed. Reducing the cost of ownership would certainly be a plus, especially after the warranty expires.

 

[gnuarm]

Way too much doom and gloom here without people really knowing anything.

They will be fine. No other car company has "stores".
It's always a combo of service center + dealership.

I'm pretty sure Tesla will now only just have that,instead of store retail locations in high end malls and stuff that cant service cars.

Really I think this is a positive.

Shut down retail only locations. Put that money into new Service Center + Store locations. That way you dont have retail people just hanging around the store if nobody is in it. They could be servicing cars as well.

I don't think you've been paying attention. Musk often says a lot more than he really should. His announcement shows the thinking and that thinking is to reduce costs enough to enable a $35,000 model 3 which clearly could not be done otherwise.

Tesla has said nothing about putting "that money" into anything other than reducing costs. There will be no retail people. They are being laid off. Musk said 82% of sales have been online. So how many of the 18% will be willing to buy a car online??? This could be as much as an 18% drop in sales.

 

[ElectricLee]

 

[neroden]

Do you have to pay the tax twice (once for Ohio and once for Michigan)?

The rule in general is that you pay tax in the state of registration, but get to subtract any tax paid to the state of purchase. California has the highest sales tax rates in most of the US, so anything drop-shipped from California, you would not pay local tax. I don't remember the Ohio vs. Michigan tax rates.

 

[jgs]

I don't remember the Ohio vs. Michigan tax rates.

It’s immaterial since the Michigan buyer doesn’t pay Ohio tax at all.

 

[gnuarm]

The rule in general is that you pay tax in the state of registration, but get to subtract any tax paid to the state of purchase. California has the highest sales tax rates in most of the US, so anything drop-shipped from California, you would not pay local tax. I don't remember the Ohio vs. Michigan tax rates.

That rule is in no way "general". It is up to each state to decide whether to tax and whether to forgive tax paid to another state. Maryland forgives tax paid to another state. I think Virginia does too. West Virginia does not! Not a penny.

The tax in Tennesee is huge, 9% I believe. But if you bring a car into the state after registering it elsewhere, there is no tax.

 

[timvracer]

It's worse... I am sure they are counting the number of cars ORDERED online, but not accounting for the number of those that were convinced by visiting a center and test driving the car. Like me.

I don't think you've been paying attention. Musk often says a lot more than he really should. His announcement shows the thinking and that thinking is to reduce costs enough to enable a $35,000 model 3 which clearly could not be done otherwise.

Tesla has said nothing about putting "that money" into anything other than reducing costs. There will be no retail people. They are being laid off. Musk said 82% of sales have been online. So how many of the 18% will be willing to buy a car online??? This could be as much as an 18% drop in sales.